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December

The model financial report has been designed to assist with the preparation of half year financial reports for a managed investment scheme in accordance with Australian Accounting Standards for the half year ending on or after 31 December 2010.

This publication is organised into four sections: a summary of new pronouncements, a guide to local reporting obligations, an illustrative half-year report and a presentation and disclosure checklist.

The 2011 New Year Honours List published today recognising outstanding achievement and service across the whole of the United Kingdom includes Ken Wild as an Officer of the Order of the British Empire (OBE).

He is honoured for services to financial reporting.

Ken Wild was a partner at Deloitte for 26 years until his retirement in 2010, for much of that time he led the UK firm's technical department and, more recently, the Global IFRS Leadership Team. Mr Wild was also a member of the ASB from 1994 to 2003 and IFRIC from 2003 to 2009. He also helped maintain IAS Plus and has written numerous articles and books on accounting. He is currently a Fellow, Judge Business School, Cambridge University, where he lectures on financial reporting in the School's
masters' programmes.

The IFRS Interpretations Committee will meet at the IASB's offices in London on Thursday and Friday 6 and 7 January 2011 (morning only on 7 January). The Committee will continue deliberations on the accounting for production phase stripping costs in the mining industry and put options written over non-controlling interests, consider whether to add a project to its agenda on contingent pricing of property, plant and equipment and intangible assets, and consider a number of other matters.

The meeting is open to the public and will be webcast.

The full agenda for the meeting can be found here. We will update this page for any changes to the agenda, and our Deloitte observer notes from the meeting as they become available.

Back in the early days of the International Accounting Standards Board (IASB), its Chairman, Sir David Tweedie, knew what represented the frontline in protecting the independence of the Board.

It was a person, a very large person, six foot seven inches tall and big with it. He was Paul Volcker, the Chairman of the Trustees. Volcker had been Chairman of the Federal Reserve in the US and was then, as now as President Obama showed, a go-to person if heavy-lifting was required somewhere in the financial and business world. Tweedie used to refer to him as "a superb second-row", a reference to a key man in the scrum in a game of rugby who provides the shove which would deter, then overpower, and finally defeat the opposition.

But as time went on and the work of the IASB extended across Europe, then out across the rest of the world, and even into the heartland of US corporate life the need for a rather more sophisticated, urbane, but still effective governance system became necessary. It needed the strength to protect the Board's independence. But it needed to show real accountability acceptable to all.

This is always difficult. The perennial problem of who regulates the regulators has echoed down the centuries. The US standard-setter, FASB, had a set of trustees who reported upwards to the nation's senior regulator, the SEC, whose Chairman was appointed by the President. The IASB had set up a similar Board of Trustees, but it had not been obvious who these people should report to, if anyone. But, post-2005 when all listed companies in Europe had to follow international financial reporting standards, the IASB was effectively setting the law. Accountability through a simple statement of independence backed by the trustees was no longer enough to satisfy both opponents and supporters.

So the long and sometimes drawn-out process of creating an effective further tier began. And last year the Monitoring Board, drawn from and accountable to the world's great public regulatory bodies, the SEC, the European Commission, the global stock market organisation, IOSCO, and the Financial Services Agency of Japan, with the Basel Committee on Banking Supervision as an observer, took its place at the top of the accountability pyramid.

And once in place it decided that it needed a full review of whether the current governance structure worked. And, more or less at the same time, the Board of Trustees decided that, with the end of the IASB's first decade coming into sight next June, it should also take a look as how the whole system worked. We are now in the midst of an unprecedented bout of discussions and consultations aimed at reinforcing the governance system. And, as with any effort at throwing everything up in the air and seeing how it looks when it lands, all manner of hares are starting to run.

This is a good thing. The credibility of any organisation depends on its transparency and its perceived openness to change. But there is also an inherent danger. Old arguments, previously rebuffed and dismissed, can gain traction again. No one doubts the need for independence. At the most recent meeting of the Monitoring Board, in New York at the end of October, the European Commission's Commissioner for Internal Market and Services, the powerful Michel Barnier, went out of his way to say that any discussion of governance "should not undermine the Board's independence", and then, to underline his point, followed that with: "Never". But the points of friction which emerged so sharply at the height of the financial crisis are there for fighting over once more. Are financial reporting standards and the process which creates them there for the benefit of capital market investors? Or are they there to provide a balance between capital markets and prudential financial stability concerns which regulators strive for? Should the members of the Monitoring Board be endorsers or enforcers? This could be an interesting argument in the future. The man who takes over as Chairman of the IASB when Tweedie steps down at the end of June next year, Hans Hoogervorst, was Chairman of the Financial Crisis Advisory Group and in both its report on the standard-setting response to the financial crisis and in Hoogervorst's public pronouncements it is obvious on which side of the line he sees himself. "Accounting rules cannot make stable what is inherently unstable", is a favourite line. Even the Governor of the Bank of England appeared to weigh in to this argument recently when he declared it to be "very silly" to assume that all risks and challenges could be encompassed by one magic number.

But the two processes of re-assessing the role of both the Monitoring Board and Trustees run wider than that. They encompass the nature of quite what public interest the IASB is acting in. They look at the primary role of financial reporting. They look at how you balance independence with accountability. And they puzzle about where the finance should come from. And above all they are looking to see if the intensity of standard-setting can be lowered and more time devoted to how effective standards are and the benefits they provide. An organisation which devotes much time to measurement needs to probably conduct itself in a more measured way.

The products of all this debate are supposed to emerge in the earlier part of next year. They should provide more indications of precisely where the IASB, and its governance bodies, are moving. But as its first, hugely successful, decade moves to a close there is still everything to play for.

As reported earlier, the Board of Trustees of the Financial Accounting Foundation (FAF) has named Leslie F. Seidman chairman of the US Financial Accounting Standards Board (FASB) effective immediately.

The United States Securities and Exchange Commission (SEC) welcomes the appointment: "Her experience will facilitate the progress of important initiatives on the FASB agenda as they seek to continually improve the quality of financial reporting standards for the benefit of investors." (click for full SEC statement)

The American Institute of Certified Public Accountants (AICPA) through its Center for Audit Quality (CAQ) congratulates Ms Seidman and states: "The public company auditing profession looks forward to working with her as she oversees the development of U.S. accounting standards and coordinates convergence efforts with the International Accounting Standards Board." (click for full CAQ statement)

Financial Executives International (FEI) applauds the appointment: "We believe that Ms Seidman has done a remarkable job since taking on the role as Acting Chair in the fall of 2010. We are confident that she is well suited to lead the rest of the Board and work with organizations such as FEI to ensure the development of high quality accounting standards during this critical time for global standard setting." (click for full FEI statement)

Leslie Seidman herself had commented on the pivotal time of her appointment: "We are at a crucial point in our convergence program, and my fellow Board members and I are working in close partnership with the IASB to improve the comparability of financial information around the world." (click for FAF press release)

Deloitte's Global Financial Services Industry (GFSI) network has released two publications on IFRSs for Investment Funds:

Harnessing the forces of change: IFRS for Investment Funds addresses and highlights the major differences between IFRS and the US Generally Accepted Accounting Principles (US GAAP). As the acceptance of IFRS in the US and elsewhere becomes more imminent, this report provides investment managers with key issues they should be considering when approaching IFRS.

The accompanying paper Harnessing the forces of change: Illustrative financial statements 2010 provides descriptive examples. It includes a variety of example industry disclosures to provide investment managers with a clearer idea of what the switch to IFRS would entail.

The report has been checked by the Global Reporting Initiative (GRI) and also serves as Deloitte's Communication on Progress to the United Nations Global Compact for 2009-2010. The performance measures for community investment and environment are based on widely recognized guidelines and offer an example of which performace measures and data can be used in integrated reporting:

For reporting on community investment, standards from the Committee Encouraging Corporate Philanthropy and the London Benchmarking Group were observed:

The monetary value of community activities by member firm people was estimated according to the type of service performed.

The value of volunteer work is based on local member firms' staff cost.

Pro bono work, defined as work that the member firms might otherwise sell but that was performed for free or at a discount below firm cost, has been valued at local member firms' market rate for client service, less whatever fees organizations might have paid.

Estimates of carbon emissions were prepared according to the Greenhouse Gas Protocol created by the World Resource Institute and the World Business Council for Sustainable Development. Deloitte and the member firms have applied the most recent, authoritative, and locally specific carbon dioxide emissions factors available for the countries in the reoprt's scope.

Performance data was obtained from financial reporting systems, other internal records, and outside sources such as travel agencies, utitlities, and property managers.

Today, the Board of Trustees of the Financial Accounting Foundation (FAF) named Leslie F. Seidman chairman of the US Financial Accounting Standards Board (FASB) effective immediately.

Seidman chairman of the US Financial Accounting Standards Board (FASB) effective immediately. Ms Seidman has been acting chairman of the FASB since Robert H. Herz retired on 30 September 2010. Click for press release (link to FAF website).

The press release further noted that the Board of Trustees of the FAF is engaged in the process to evaluate candidates for the two additional board seats of the FASB, and is expected to make an announcement in early 2011.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.

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